Three Things I Learned About the New Uncompensated Overtime Rule

Karen Manos published an article entitled “The New Uncompensated Overtime Rule:” in the March 2015 issue of Government Contract Cost, Pricing & Accounting Report. From this article, I took away the following three key points:

1 – Some of the regulatory history of the issue of uncompensated overtime. This, like many other issues started with an audit finding.

2 – The importance of public comments to proposed regulations. Sometimes the comments are ignored, but at least they are on record, and sometimes the regulators even consider them (see my article on the demise of the proposed DFARS Business System Compliance Rule on GovCon 360.com here.)

3 – Indirect exempt employees need not account for all of their hours worked*, but the new FAR 52.237-10(b)(2) requires those employees that charge both direct and indirect e.g., owners of small businesses, to do so. So when does a small business owner stop working? (It sounds like a well thought-out policy is in order.)

In addition to the above, FAR 52.237-10(d) says that unrealistically low labor rates will be considered when evaluating cost realism. So account for all of the hours, but don’t make the employees work too many of them.

* This does not address issues like accounting for unallowable indirect activities.